India and Pakistan agreed to a ceasefire. Whilst there is calm at the borders, how has the military engagement impacted the economics of both nations?Global rating agencies raised red flags on the impact of sustained escalation. Moody’s had said that it would have set back Pakistan’s progress in achieving macroeconomic stability. But how do the economic …
India vs Pakistan: 5 economic indicators you should know – The Financial Express
India and Pakistan agreed to a ceasefire. Whilst there is calm at the borders, how has the military engagement impacted the economics of both nations?
Global rating agencies raised red flags on the impact of sustained escalation. Moody’s had said that it would have set back Pakistan’s progress in achieving macroeconomic stability.
But how do the economic parameters of both countries stack up at the moment? From GDP growth and per capita income to inflation control and employment trends, India has surged ahead with strong economic performance, while Pakistan is struggling with stagnation and instability.
Here is a look at some of the key parametres:
India: India’s real GDP growth for 2025 stood at 6.4 per cent. According to the International Monetary Fund (IMF) data, GDP at current prices for the period was at $4.19 trillion.
Pakistan: Pakistan’s real GDP growth for FY25, according to data by IMF, stood at 2.6 per cent. Pakistan’s GDP at current prices is approximately $373.08 billion, which is a fraction of India’s. Recurring challenges like political instability, balance-of-payment issues, and structural inflation has been weighing on growth.
Takeaway: India’s economy is over 10 times larger than Pakistan’s in nominal terms.
India: India’s GDP per capita, according to IMF data, stands at $12.13 thousand in 2025, indicating economic prosperity.
Pakistan: Pakistan’s GDP per capita is approximately $6.95 thousand, which is significantly lower than India’s. This gap reflects deeper income inequality, lower productivity, and slower economic growth.
Takeaway: On average, this indicates a gap between the purchasing power parity of the two countries. Indians on an average earn 70% more than their Pakistani counterparts.
India: Through tight monetary policy, IMF data stated, India has managed to keep inflation rate for 2025 at 4.2 per cent. According to data released by the Ministry of Statistics & Programme Implementation, India’s retail inflation, based on the Consumer Price Index (CPI), for March slipped to 6-year low at 3.34%. While food inflation spiked occasionally, it is hovering close to RBI target.
Pakistan: Pakistan has been battling high inflation. IMF’s data shows 2025 inflation projection at 5.1 per cent. In 2024, however, inflation had surged to 23.4 per cent due to currency depreciation, energy price hikes, and supply chain disruptions.
Takeaway: High inflation in Pakistan is a key worry. India has more stable macroeconomic control.
India: According to the IMF, India’s population in 2025 stood at 1.45 thousand millions with an unemployment rate of 4.9 per cent, down from 8.7 per cent in 2020, indicating an improving job market over the years.
Pakistan: On the other hand, IMF data stated, Pakistan’s population in 2025 stood at 240.54 million and the unemployment rate was at 8 per cent in 2025, worsened from 6.6 per cent in 2020.
Takeaway: While India experienced a sharp dip in unemployment after 2020, Pakistan saw a significant spike in 2025, suggesting growing employment challenges in its economy.
India: India’s forex reserves dropped by $2.06 billion to $686.06 billion for the week ending May 2, snapping an eight-week gaining streak that had lifted reserves to a near six-month high, data released by the Reserve Bank of India stated.
Pakistan: Pakistan’s reserves have remained volatile, and barely crossed $15 billion. This too has been often supplemented by IMF bailouts and support from friendly nations (e.g., Saudi Arabia, China). The IMF has recently decided to allow for “an immediate disbursement” of $1 billion to Pakistan.
Takeaway: India has a much stronger external position, allowing more freedom in trade and investment policies.
All in all, Pakistan’s economic trajectory has been a continuous cycle of bailouts, geopolitical shocks and sustained dependence on loans. India, on the other hand is one of the world’s fastest growing economies led by stable macro indicators.
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